Last summer The Economist published a catchy piece arguing that data will replace oil as the wealth generator for nation economies.
How can invisible bits of data be worth more than the black stuff that hits our pockets each time we fill up our cars?
The central piece of the commentary argued that data will become so fundamental to future economic success and national security that anti-trust legislation will be required to regulate its use:
“The world’s most valuable resource is no longer oil, but data…. A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow.”
The value of data has long been known by the CEOs at Google, Amazon, Facebook and other technology giants who between them have become the most valuable businesses in the world, thanks to all the free status updates and photos we give them.
Soon after The Economist published their piece, a variety of critics pointed out that data is nothing like oil; citing oil as a finite resource that can only be used once, whereas data is endlessly available and can be used many times over for different purposes.
This criticism essentially points out that data is going to be worth far more in this century than oil ever was in the last.
Hair splitting aside, there is little doubt that data is changing the world.
The question for the construction sector is how can we exploit this future data revenue potential during the construction and then in-use stages, to pivot us away from a low margin, high risk and fragmented industry into a joined-up data rich super tanker?
Real-Time Data
Before we can get too far ahead of ourselves. There are practical matters to address first.
A sector that still relies on paper delivery notes that get lost, archived in boxes or thrown away at the end of a project is not going to achieve any sort of data insight nirvana.
The intrinsic value of the data that makes the likes of Facebook and Google so valuable is that they have systems to analyse and gain insight from live data streams, which they can also benchmark against historical data. When it comes to making use of data and profiting from it, there is not a single piece of paper.
Yet all over the world, the construction sector still relies heavily on pieces of paper exchanging hands at site entrances.
The AI and machine learning tools used at Facebook, Amazon and Google to generate all their wealth do not care what the data is or where it comes from. They care that it is digital.
AI and machine learning tools have now become so widely available that moving data around the world contributes more to global GDP than moving real physical goods like nuts and bolts.
How construction replaces paper, collects live data and feeds it into these machine learning tools is going to be the inflection point which will tie all forms of digital technologies aimed at the construction sector, from virtual reality, wearables, laser scanning, 3D modelled information to Internet-of-Things enabled devices.
Smart Contracts
The data wealth generated by technology giants comes from us. We all give our data freely to Facebook, Google, Amazon, Microsoft and others because they provide free tools that billions of people find compelling.
It seems logical that the construction sector needs to find its own compelling and freely available technology tools if people are to give up some of their business sensitive data and make it open and freely available for others to use and exploit commercially.
As part of the Process Innovation Forum (PIF) Co-Creation programme, DCW2017 saw a meeting of minds at the PIF Blockchain workshop. This high-energy session looked at how distributed ledgers could play a significant role in the transformation of the construction sector and its industry groups and uncovered some of the value and application capabilities that blockchain can bring.
An outcome of the workshop has seen the formation of the Construction Smart Contracts Committee whose voluntary contributors see one answer to increasing digital uptake and opening up data in the construction sector is to utilise smart contracts technology.
Automated, self-executing and real-time contracts have been pioneered over the past decade and construction is one of the sectors most suited to benefit from this new technology.
Smart contracts are typically simple pre-defined obligations that run on distributed ledgers, more commonly known as blockchains.
Shipping is one example of an industry that has recently began to adopt smart contracts.
The shipping business model is almost completely reliant on logistics technology. After briefly piloting smart contracts some of the firms involved in the testing began implementing distributed ledgers and smart contracts because they found the tools worked just as well and they generated real-time data, at a fraction of the cost of their existing systems.
Smart contracts are cheap to deploy and storing data over decades is as cheap as running a laptop, making them suitable for the entire construction sector to adopt, opening up distributed real-time data to every size of organisation.
People, equipment and materials are the building blocks of all projects and each one can be tracked in real-time opening the prospect of technology tools that can track planned vs. as delivered resources.
When connected to wearables technology and equipment tracking chips, real-time data feeds open up the construction industry to the same AI and machine learning tools that are used to generate the high margin returns enjoyed by Google shareholders.
By adopting a new technology at the same time as the manufacturing and shipping sectors, the construction sector is poised to benefit from this new technology in the same way that developing countries were able to jump straight to mobile phones, avoiding decades of investment in wired infrastructure.
Construction Smart Contracts Workstreams
The Construction Smart Contracts Committee is aiming to make smart contracts tools freely available, with a focus on these initial workstreams:
- Integration with Standard Forms of Contract
- Creation of project bank accounts
- Speeding up cashflow payments
- Simple insurance contracts
- Collateral Warranties and third-party insurance contracts
- Free connectors to Enterprise applications
- Connectors to private and public distributed ledgers and blockchains
- Machine learning and AI data mining tools
- Integration with VR and wearables technology
As we explore and blog about these and other smart contract workstreams, the compelling case for their practical use will be explored again at DCW2018.
About the Author: Chairman of the Construction Smart Contracts Committee; Co-founder of the Helium Blockchain Association and active contributor of the Process Innovation Forum.